By the time the closing bell sounded on Friday, it would not have been surprising to have heard some traders and investors say “What the heck happened to January?”
The first month of year is usually one of the best for stocks and while some argue the utility of the January Effect is overstated, what is not for up debate is the dismal performances turned in by the major U.S. indices last month. Soft economic data, coupled with troubles in the emerging markets, triggered a global sell-off in the last week of the month. [January ETF Performance Report]
Still, as at least one famous personality likes to say, there is always a bull market somewhere and that was the case in January as the 10-best non-leveraged ETFs posted some impressive gains.
First, some notes about this list. The rankings were pulled from ETFReplay.com as of January 30. Second, ETNs were excluded, but it should be noted the iPath Dow Jones-UBS Natural Gas Total Return Sub-Index ETN (NYSEArca: GAZ) was January’s best performer among ETNs and ETFs.
The list is in ascending order starting with the…
Market Vectors Biotech ETF (NYSEArca: BBH)
January Gain: 9.7%
Comment: Those that have been following the biotech industry since the start of the year probably are not surprised to see BBH on this list. If not for a loss of about 1% on Friday, BBH would flirting with a January gain of almost 11%. Impressively, that comes after a 2013 in which the ETF was locked in an intense battle to be the best non-leveraged health care ETF. [Intense Duel to be 2013’s Best Health Care ETF]
Market Vectors Gold Miners ETF (NYSEArca: GDX)
January Gain: 11%
Comment: In one of the most stunning Lazarus acts by an ETF in recent memory, GDX has gone from one of 2013’s worst ETFs to one of 2014’s best. Obviously, there is still a long way to go in 2014 and gold miners ETFs have shown investors the behavior of these funds can change on a dime. GDX’s rally actually late last year as the ETF is up 14% since Dec. 20.
Market Vectors Vietnam (NYSEArca: VNM)
January Gain: 13.3%
Comment: It has been a brutal year for emerging markets. Fortunately for investors in VNM, Vietnam is classified as a frontier market. That explains part of the rally in VNM. The more significant angle here is that Vietnamese policymakers are working to lift previously restrictive foreign ownership limits on Vietnamese companies. Foreign investors have responded by upping their exposure to the country’s equities. [Vietnam ETF Could Rise on Bank Ownership Limit Increase]
Market Vectors Egypt ETF (NYSEArca: EGPT)
January Gain: 13.3%
Comment: Put simply, no single-country emerging markets ETF has been better in 2014 than EGPT. The surge in Egyptian stocks, which currently rest at multi-year highs, has not just benefited EGPT. Several multi-country Middle East ETFs with significant Egypt exposure have proven far more durable than their traditional emerging markets counterparts. Signs that political volatility is diminishing in North Africa’s largest economy have encouraged investors from other Arab nations to allocate new capital to Egypt and the expectation is Western Investors will follow. [Middle East ETFs Standout]
Market Vectors Junior Gold Miners ETF (NYSEArca: GDXJ)
January Gain: 14%
Comment: A resurgence that would make even GDX blush, GDXJ has been bolstered in part by talk of low valuations attracting buyers to the small-cap mining space. Traders applying the logic that if large-cap gold mining names rebound, small-caps will do so even more strongly have also boosted GDXJ. This ETF was reverse split last year. Now it is one of 2014’s best performers.
Guggenheim Solar ETF (NYSEArca: TAN)
January Gain: 14%
Comment: TAN more than doubled last year and was 2013’s best non-leveraged ETF of any type making its double-digit gain to start 2014 all the more impressive. TAN has performed well to start the year despite significant exposure to China, making us wonder if emerging markets were even flat instead of plunging, how much would TAN be up this month? [Extended EM Decline Will Harm These Non-EM ETFs]
PowerShares Dynamic Biotechnology & Genome Portfolio (NYSEArca: PBE)
January Gain: 14.6%
Comment: PBE is one of the smart beta spins on biotech ETFs as the fund’s 30 holdings are selected on factors including price momentum, earnings momentum, quality, management action, and value. Only two stocks account for more than 5% of the ETF’s weight.
United States Natural Gas Fund (NYSEArca: UNG)
January Gain: 15.6%
Comment: As we noted earlier, the aforementioned GAZ is the best performing non-leveraged exchange traded product to this point in 2014 and this anecdote illustrates just how strong natural gas been to start the year: UNG lost more than 9% Thursday and still rose nearly 16% in January.
Global X Gold Explorers ETF (NYSEArca: GLDX)
January Gain: 17%
Comment: GLDX leads the way among the “back from the dead” gold mining ETFs. GLDX lost 58% last year. More gains are not out of the question for GLDX, but the fund must clear resistance created by a downtrend line that dates back to last September. If GLDX can breakthrough that resistance around $13.80, upside from there could be significant.
SPDR S&P Biotech ETF (NYSEArca: XBI)
January Gain: 17.5%
Comment: XBI has backed off the all-time highs it set earlier this month, but that has not been enough to keep the equal weight biotech ETF from being 2014’s top non-leveraged ETF. Some biotech investors remember that XBI was the lone sector ETF with any exposure to Intercept Pharmaceuticals (NasdaqGM: ICPT), the stock that surged over $200 in a single session last month. That put the spotlight on XBI and the ETF gained further acclaim for its small and mid-cap exposure, indicating the ETF is home to a swath of potential takeover targets. [Tiny Stocks Could Mean Big Gains for This Biotech ETF]